Holley Performance Brands' Enhanced Operational Performance and Recent Credit Upgrades Have Enabled an Amendment to the Revolving Credit Facility, Creating a Covenant-Lite Capital Structure

Rhea-AI Summary

Holley Performance Brands (NYSE: HLLY) has successfully amended its senior secured revolving credit facility, effective December 4, 2024. The amendment introduces a 5.0x total net leverage springing covenant, tested only when the revolver is drawn, and extends maturity to November 18, 2029. The available borrowing under the revolver is set at $100 million.

The amendment was facilitated by operational improvements and recent credit upgrades from S&P and Moody's. According to CFO Jesse Weaver, this modification enhances Holley's financial flexibility and reduces refinancing risk while supporting their transformational initiatives.

Positive

• Credit rating upgrades from S&P and Moody's
• Extended credit facility maturity to 2029, reducing refinancing risk
• Improved operational performance and cash flow
• $100 million available borrowing capacity
• More flexible covenant structure (springing covenant vs maintenance covenant)

Negative

• Credit facility still requires 5.0x leverage covenant when drawn

Insights

Financial Analyst

The successful amendment of Holley's revolving credit facility marks a significant improvement in the company's financial flexibility and debt structure. The key positive changes include:

• Extension of maturity to 2029, reducing refinancing pressure
• Replacement of maintenance covenant with a more favorable 5.0x springing covenant
• $100 million available borrowing capacity

The covenant-lite structure is particularly advantageous, as it only requires testing when the revolver is drawn. This improved credit facility, coupled with recent upgrades from S&P and Moody's, reflects strengthening operational performance and enhanced cash flow generation. For a small-cap company with a market cap of $345M, securing such favorable terms demonstrates creditors' growing confidence in Holley's financial health and business trajectory. This amendment effectively reduces both near-term financial constraints and long-term refinancing risks.

Market Research Analyst

This credit facility amendment is strategically timed and positions HLLY well in the automotive aftermarket sector. The automotive performance parts market has been showing resilience and this enhanced financial flexibility allows Holley to better capitalize on growth opportunities while maintaining operational agility. The extended maturity to 2029 provides a stable foundation for executing long-term strategic initiatives without immediate refinancing pressures. The market should view this development positively as it demonstrates both improved operational performance and stronger creditor confidence. The covenant-lite structure is particularly notable as it's typically reserved for larger, more established companies, suggesting Holley has significantly strengthened its market position and financial credibility.

Proactively Enters into an Amendment which Provides Improved Financial Flexibility

BOWLING GREEN, Ky.--(BUSINESS WIRE)-- Holley Performance Brands (NYSE: HLLY) a leader in automotive aftermarket performance solutions, today announced the successful amendment of its senior secured revolving credit facility, effective December 4, 2024. This amendment was driven by operational improvements and recent credit upgrades.

The amendment includes a springing covenant of 5.0x total net leverage that is only tested when the revolver is drawn and extends the maturity date to November 18, 2029. Additionally, available borrowing under the revolver is updated to $100 million.

“We are pleased to announce an amendment to our revolver, enhancing Holley's financial flexibility to support our capital needs, thanks to our operational success and improved earnings and cash flow,” said Jesse Weaver, Chief Financial Officer of Holley. “Our improved operational performance combined with upgrades from S&P and Moody’s on our credit and debt ratings this year, allowed us to proactively amend our revolving credit facility. We are proud of the efforts taken to further reduce risk by replacing the current maintenance covenant with a springing covenant while also reducing refinancing risk by extending the maturity on the revolver through 2029. The amended terms provide us with further confidence as we deliver on our transformational initiatives and drive long-term value at Holley.”

For more Holley Performance Brands company news, click here.

Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties, and other important factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to Holley’s ability to (1) successfully design, develop, and market new products, (2) maintain and strengthen demand for our products and brands, (3) attract new customers in a cost-effective manner, (4) expand into additional consumer markets, and (5) and the other risks and uncertainties set forth in the Annual Report on Form 10-K for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (“SEC”) on March 14, 2024, and in any subsequent filings with the SEC.

About Holley Performance Brands
Holley Performance Brands (NYSE: HLLY) leads in the design, manufacturing and marketing of high-performance products for automotive enthusiasts. The company owns and manages a portfolio of iconic brands, catering to a diverse community of enthusiasts passionate about the customization and performance of their vehicles. Holley Performance Brands distinguishes itself through a strategic focus on four consumer vertical groupings, including Domestic Muscle, Modern Truck & Off-Road, Euro & Import, and Safety & Racing, ensuring a wide-ranging impact across the automotive aftermarket industry. Renowned for its innovative approach and strategic acquisitions, Holley Performance Brands is committed to enhancing the enthusiast experience and driving growth through innovation. For more information on Holley Performance Brands and its dedication to automotive excellence, visit https://www.holley.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241204624686/en/

Media Relations Contact(s):

Jordan Moore, jmoore@tinymightyco.com / Sydney Goggans, sgoggans@tinymightyco.com

Investor Relations Contacts:

Anthony Rozmus / Neel Sikka

Solebury Strategic Communications

203-428-3224

Holley@soleburystrat.com

Source: Holley Performance Brands

FAQ

What changes were made to Holley's (HLLY) credit facility in December 2024?

Holley amended its revolving credit facility to include a 5.0x total net leverage springing covenant, extended maturity to November 2029, and set available borrowing at $100 million.

When does the new maturity date for Holley's (HLLY) revolving credit facility end?

The new maturity date for Holley's revolving credit facility is November 18, 2029.

What is the new borrowing capacity under Holley's (HLLY) amended credit facility?

The amended credit facility provides Holley with $100 million in available borrowing capacity.

What triggered Holley's (HLLY) credit facility amendment in 2024?

The amendment was triggered by operational improvements and credit rating upgrades from S&P and Moody's.